The pound skidded lower versus the Swedish Krona across the previous week, despite a hat-trick of upbeat data. The pound Swedish krona exchange rate briefly pushed higher, reaching a peak of 12.773 on Tuesday before trending lower. The pair closed the week -0.78% lower at 12.5878.
GBP/SEK is climbing at the start of the new week as coronavirus anxieties drag on the Swedish Krona. The pair is up 0.5% at 12.6585 at 06:15 GMT.
Pound To Focus On Brexit Headlines
Sterling lost ground in the previous week despite better than expected inflation figures, retail sales and PMI data. Whilst the data continues to show the Boris bounce is alive and kicking, investors still sold out of sterling.
Recent data has shown that the UK economy picked up after the decisive win by the Conservatives in the UK election. However, the fact that the pound struggled to gain traction and in fact slipped lower shows that investors are starting to price in Brexit trade deal uncertainty again, ahead of talks starting in March.
EU Ambassadors have so far failed to agree on a common position on the bloc’s future relationship with the UK. This could result in a delay to the start of trade talks, pressurising an already very tight time frame, increasing the likelihood of a deal not being reached.
There is little in the way of UK economic data this week. Investors will focus heavily on Brexit developments as the UK government has signalled that it will publish its mandate for the trade deal later this week.
Sweden Vulnerable To Coronavirus Supply Chain Disruption
The Swedish Krona is trading lower at the start of the new week as investors remain gripped by the latest coronavirus outbreak developments and its rapid spread. Italy now has 152 cases and 3 deaths, by far the highest number of confirmed cases in Europe. The Venice Carnival has been cancelled, 10 towns are on lock down and many businesses have suspended activities. Neighbouring Austria has blocked all trains travelling from Italy. Meanwhile, South Korea has seen a 20-fold increase of cases in 5 days.
In the latest Riksbank monetary policy meeting, the Swedish central bank was more vocal than most central bankers had been on the risks that the coronavirus outbreak brings to the global, EU and Swedish economies. As an open economy, Sweden is particularly vulnerable to supply chain disruption from (lack of immediate parts from China) and lower demand from Asia.